Smartphone vendor HTC Corp (宏達電) yesterday forecast revenue for this quarter would continue falling as the firm is fighting the headwinds of a shorter product cycle and the upcoming new iPhone from Apple Inc.
In a conference call with investors, HTC said sales for this quarter would contract by between 27.8 percent and 35.48 percent from last quarter to between NT$42 billion (US$1.4 billion) and NT$47 billion.
Despite falling average selling prices of its smartphone products, HTC aims to sustain gross margin at between 22.5 percent and 23 percent this quarter, compared with 22.2 percent last quarter, said Chang Chia-lin (張嘉臨), the company’s chief financial officer and president of its global sales division.
The company expects this quarter to be profitable, with earnings per share forecast to be between NT$0.05 and NT$0.69, much lower than the NT$2.74 it posted last quarter.
HTC is facing a “very competitive spec game” in developing countries such as China, Chang said of Chinese brands Xiaomi Corp (小米) and Huawei Technologies Co’s (華為) fast gains in market share.
HTC would not compete with its Chinese rivals on smartphones priced below 1,000 yuan (US$162), but focus on building products with high-end specification or design to drive the company’s sales, Chang said.
Asked by analysts if HTC plans a tie up with a Chinese peer to scale up its businesses in China, Chang said: “The answer is no.”
Nevertheless, HTC will continue cooperating with Chinese telecoms to sell its smartphones, which “eventually will be a win-win,” he added.
In the April-to-June quarter, HTC’s net profit more than doubled to NT$2.26 billion from the previous year, despite a year-on-year drop in sales, due largely to tighter controls of operating expenses.
In the first quarter, the company posted a net loss of NT$1.88 billion.
Operating profit was NT$2.43 billion last quarter, back in positive territory after being in the red for three consecutive quarters.
The Taiwanese smartphone brand attributed its profitability last quarter to a reduction in operating expenses and nearly 100 percent sequential sales expansion driven by sales of its One M8 flagship phone, the One Mini 2 mid-range model and the Desire 816 entry-level handset.
Even though the company saw its sales momentum grow strongly in emerging markets such as China and India, second quarter sales of NT$65.06 billion still represented a 7.92 percent decrease year-on-year, company data showed.
Yuanta Securities Co (元大證券) analyst Jeff Pu (蒲得宇) yesterday said HTC’s weak revenue guidance for this quarter indicated that it is taking a “defense position” ahead of the launch of iPhone 6.
He said HTC’s revenue forthe next quarter would likely fall further, as its new products in the pipeline might fail to “wow” consumers.
That will drive HTC’s bottom line to fall below the breakeven level next quarter, he said in a client note.
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